Fact Sheet 2Q 12 CORPORATE GOVERNANCE. MARKET CAP (June 29, 2012) R$ R$ 5.8 Bi. CLOSING SHARE PRICE ON June 29, 2012 R$ 10.63

Transcription

1 Fact Sheet 2Q 12 MARKET CAP (June 29, 2012) R$ R$ 5.8 Bi CLOSING SHARE PRICE ON June 29, 2012 R$ NUMBER OF SHARES 550,035,331 TREASURY SHARE in June: 550,037,931 FREE FLOAT 41.4% IR CONTACT CFO and Director of Investor Relations: Flavio Marassi Donatelli Investor Relations Executive Manager: Alvaro Penteado de Castro CONFERENCE CALL/WEBCAST: Friday, July 27, 2012 Portuguese: Time: 10:30 am (Brasília, 09:30 am NY EST) English: Time: 11:30 am (Brasília, 10:30 am NY EST) Support Material: To connect: Calls from Brazil: Calls from USA: Toll Free: Calls from other countries: Code: Duratex Webcast: CORPORATE GOVERNANCE address for matters relating to corporate governance, for the attention of top management: governanca.corporativa@duratex.com.br Shares listed on the BM&FBovespa Novo Mercado Only common shares in circulation, in other words, each carries the right to one vote at General Shareholders Meetings 100% tag-along rights for the shares Three independent members on the Board of Directors Advisory Committees to the Board of Directors: Staff, Nomination and Governance; Sustainability; Auditing and Risk Management; Trading and Disclosure; and Related Parties. The committees are chaired by independent Board members, with the exception of the Trading and Disclosure Committee, which is chaired by the investor relations director. Dividend policy with a minimum distribution of 30% of adjusted net earnings Policy in force for the disclosure of Material Events and Facts and Trading in Securities The Company has adhered to the ABRASCA self-regulation manual Shares included in the Bovespa Corporate Sustainability Index (ISE), version 2012 Number of outstanding shares: 550,037,931 Free-float of 41.4% of the total shares in issue Stockbrokers that cover the company: Ativa, Banco Fator Corretora, BTG Pactual, Citibank, Coinvalores, Deutsche Bank, Itaú Corretora, JP Morgan, Lopes Filho, Merrill Lynch, Morgan Stanley, Santander and Votorantim. 1

2 FINANCIAL SUMMARY (IFRS) 2Q12 1Q12 2Q11 1S12 1S11 HIGHLIGHTS (in R$ 000) Volume Shipped - Deca ( 000 pieces) 6,225 6,024 6,259 12,249 11,996 Volume Shipped - Panels (m3) 626, , ,146 1,230,200 1,101,470 Consolidated net revenue 809, , ,181 1,546,839 1,411,046 Gross Profit 276, , , , ,874 Gross Margin 34.2% 34.5% 33.8% 34.3% 33.9% EBITDA (1) 237, , , , ,474 EBITDA Margin 29.3% 28.3% 30.1% 28.8% 28.9% Extraordinary Event (2) , ,068 Recurrent EBITDA 237, , , , ,406 Recurrent EBITDA Margin 29.3% 28.3% 28.2% 28.8% 28.0% Net Earnings 98,401 86, , , ,259 Recurrent Net Earnings 98,401 86,247 91, , ,975 Recurrent Net Margin (3) 12.2% 11.7% 12.1% 11.9% 11.8% INDICATORS Current Ratio (4) Net Debt (5) 1,253,024 1,196,102 1,170,073 1,253,024 1,170,073 Net Debt/ EBITDA (the last 12 months) Average Shareholders Equity 3,799,279 3,737,294 3,541,398 3,763,789 3,511,774 Recurrent ROE (6) 10.4% 9.2% 10.3% 9.8% 9.6% SHARES Earnings per Share (R$) (7) Closing Share Price (R$) (8) Book Value per Share (R$) Shares Held in Treasury (shares) 1,889,486 1,889,486 1,199,486 1,889,486 1,199,486 Market Capitalization (R$ 000) (9) 5,826,817 6,309,159 7,250, ,826,817 7,250,121.5 (1) EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization), which is a measure of operational performance. (2) Extraordinary Event: during the second quarter of 2011 the operational result was positively impacted by (+) R$14,068,000 from the sale of fixed assets, the effect of which on net earnings amounted to (+) R$9,284,000. (3) Net margin: result obtained by dividing net earnings by net revenue. (4) Current Ratio: Current Assets divided by Current Liabilities. Indicates the availability in R$ to meet every R$ of short-term obligations. (5) Net Indebtedness: Total Financial Debt ( ) Cash. (6) ROE (Return on Equity): measure of performance given by the ratio of Net Earnings in the period, annualized in the quarters, to Average Net Equity. (7) Net earnings per share is calculated by dividing the profit attributable to the Company s shareholders, by the weighted average quantity of ordinary shares in issue during the period, excluding ordinary shares held in treasury. This indicator has been adjusted for periods prior to May 5, 2011, as result of the 20% share bonus issue, to allow comparison between the periods. (8) The share price quote before the share bonus issue, mentioned above, has been adjusted to take account of this effect, so as to permit comparison between periods. (9) Market value has been calculated based on the share price quote at the end of the period, multiplied by the quantity of shares (550,035,331 shares up to 1Q12 and 550,037,931 shares for 2Q12), net of the shares held in treasury. SCENARIO AND MARKET Duratex s performance, during the period, clearly reflects the negative developments from the worsening of the solvency crisis in some countries in the European Economic Community and the rise in delinquency rate in the domestic market, which have begun to affect some sectors of the economy. Both business divisions, the Deca and Wood Divisions, showed a performance that was consistent with the fact 2

3 that Net Revenue was supported by the strength in the end-consumer segments: furniture, which demonstrated increased buoyancy in the period, metal fittings and vitreous chinaware. The good performance of these sectors was helped by the low unemployment rate, the increase in real incomes, credit availability for the real-estate and retail furniture segments, as well as the availability of more appropriate financing repayment periods. Incentive measures continue to be adopted by the government in an effort to keep the domestic economy buoyant. Specifically in the case of Duratex, metal fittings and vitreous chinaware have benefited from the reduction in the Tax on Industrialized Products (IPI) to zero, the same being the case for the furniture sector, which in addition to benefiting from zero IPI, also benefited from the change in taxation applied to employee payrolls. Instead of collecting 20% in social contribution from payrolls, a fixed rate of 1% is applied to revenue. STRATEGIC MANAGEMENT Duratex carried out two strategic moves, in May, which should contribute to putting the Company in a better competitive position. In the first move, Duratex announced the signing of an agreement to subscribe to and acquire a significant stake of up to 37% in Tablemac, a leading manufacturer of MDP wood panels in the Colombian market, with its first MDF pressing machine currently in the ramp-up phase. The investment will be for approximately R$115 million, in the third quarter of 2012, and will ensure that Duratex is the largest shareholder in Tablemac. In this way, the Company will guarantee itself significant geographical diversification in a promising market. Duratex may increase its equity stake in this company to 47%, over a period of 24 months, if it decides to exercise its share subscription rights, following the decision at Tablemac s General Shareholders Meeting on May 25. The management sees the possibility of major potential return from this investment over the long term, bearing in mind the stability and growth of the Colombian economy, and the low consumption of wood panels per capita in that country, today around 1/3 of the consumption in Brazil. The second move was the acquisition of an industrial valve manufacturing unit (Metalúrgica Ipê, Mipel) from Lupatech, located in Jacareí/SP for R$45 million, also to be paid for in this third quarter. This operation secures Deca s entry into the industrial valve segment, as well as opening up the possibility of rapidly increasing Deca s valve production, seeing that this plant is currently only operating on one shift. In addition to this, ongoing investment is being carried out in expanding the Company s operations organically, which absorbed R$327.5 million in the period. Here are the main highlights: (i) investments made in the unit at Itapetininga/SP to receive a new MDF plant, with an effective production capacity of 520,000 m3/year, with inauguration planned for the first half of 2013; (ii) finalization of the construction works and the start of equipment installation at the new vitreous chinaware unit located in Queimados/RJ, with inauguration planned for the fourth quarter of 2012, and a production capacity of 2.4 million pieces/year; (iii) installation of equipment in the metal bathroom fittings unit in Jundiaí/SP which, when completed, will provide an additional production capacity of 1.2 million pieces a year; and (iv) forestry planting and maintenance. All together, these projects are likely to absorb investment of approximately R$650 million during the year. These investments are based on the good prospects shown by the Company s operational segments, as well as being aimed to strengthen the Company s competitiveness. CONSOLIDATED FINANCIAL HIGHLIGHTS (IFRS) NET REVENUE Net revenue came to a record amount of R$1.5 billion for the year-to-date, up 9.6% year-on-year. This growth was mainly due to the 11.7% increase in shipment volumes by the Wood Division, which reached an unprecedented figure of 1,230,200 m 3, as well as an improvement in Unit Net Revenue at Deca. In the second quarter, revenue also set a new record, of R$809.0 million, being up 7.7% compared to the same period in 2011, and an increase of 9.7% on the immediately preceding period. This result was due to the improvement in Unit Net Revenue, in both divisions, and the improved level of shipment volumes in the Wood Division, which was also higher than in previous quarters. 3

4 The domestic market continued to be the main sales destination, responsible for approximately 95% of the total in the quarter, despite the exchange rate. R$ 000 2Q12 1Q12 % 2Q11 % 1S12 1S11 % Net revenue 809, , , ,546,839 1,411, Domestic market 772, , , ,477,445 1,349, Export market 36,302 33, , ,394 61, Vitreous Chinaware MDF/Laminated Flooring 95.5 Domestic Market Metal Bathroom Fittings 17.3 Export Market Fibreboard 22.5 MDP Breakdown of net revenue by operational area (% in 2Q12) Net revenue for the domestic/ export market (2Q12) COST OF GOODS SOLD The Cost of Goods Sold, net of Depreciation, Amortization and Depletion, and the net variation in the Fair Value of Biological Assets, in other words, the Cash Cost, came to a total of R$870.6 million for the year-to-date, an increase of 8.3% compared to This increase was mainly the result of the rise in the cost of labor, resin (manufactured from urea and methanol) and natural gas. It should also be borne in mind that there was increased pressure on dollar-linked costs as a result of exchange-rate depreciation in the period. Under the heading of Depreciation, Amortization and Depletion, item (1) in the table below, there were various events related to amortization of the client portfolio, CPC 15 of IFRS, Satipel and Elizabeth, coming to an approximate total of R$6.4 million for the quarter, which is likely to be recurring for 15 years. The higher volumes shipped and the improved pricing base together resulted in a year-on-year increase in Gross Profit of 10.9%, to R$531.2 million, which contributed to expanding Gross Margin from 33.9% in 2011 to 34.3% in Q12 1Q12 % 2Q11 % 1S12 1S11 % R$ 000 Cash COGS (452,534) (418,113) 8.2 (422,538) 7.1 (870,647) (803,986) 8.3 Variation in fair value of biological asset (1) 36,413 32, , ,336 63, Depletion tranche of biological asset (2) (41,096) (34,585) 18.8 (35,998) 14.2 (75,681) (69,273) 9.3 Depreciation, amortization and depletion (3) (75,255) (63,416) 18.7 (66,482) 13.2 (138,671) (122,209) 13.5 Gross Profit 276, , , , , Gross Margin 34.2% 34.5% % % 33.9% - 4

5 Depreciation and Amortization 9.4 Electric Power Labor Wood (*) 19.5 Fuel Raw Materials and Other Materials Cost of Goods Sold (COGS) 2Q12 (%) Wood Division (*) Includes depletion on the cost of wood. 2Q11 3Q11 4Q11 1Q12 2Q12 Net Revenue (in R$ million) and Gross Margin (%) Fuel Depreciation and amortization Electric power Raw materials and other materials Labor 42.1 Cost of Goods Sold (COGS) 2Q12 (%) Deca Division SALES EXPENSES Sales expenses totaled R$94.7 million in the quarter, an increase of 12.6% compared to the immediately preceding quarter, as a result of higher shipment levels and seasonal events, such as the Company s participation in trade fairs and events. For the year-to-date, the nominal increase in this expense category is explained by the higher level of shipments, and consequently, freight-related expenses. With respect to net revenue, however, sales expenses remained stable. 2Q12 1Q12 % 2Q11 % 1S12 1S11 % R$ 000 Sales Expenses (94,712) (84,115) 12.6 (88,470) 7.1 (178,827) (165,628) 8.0 % of Net Revenue 11.7% 11.4% % % 11.7% - 5

6 GENERAL AND ADMINISTRATIVE EXPENSES General and administrative expenses totaled R$29.3 million in the second quarter of 2012 and R$53.4 million for the yearto-date. Compared to the immediately preceding quarter, there was an increase of 21.3% in this expense category due to higher expenditure on outsourcing, mainly in connection with mergers and acquisitions. Disregarding these events, expense levels remained practically unchanged compared to the same periods in the previous year, with marginal dilution in relation to Net Revenue for the year-to-date. 2Q11 3Q11 4Q11 1Q12 2Q12 Sales Expenses (in R$ million) and % of Net Revenue It should be pointed out that the appropriation criteria for these expenses in the Deca and Would Divisions were changed in Previously, appropriation was made as a proportion of Revenue. Currently, this is being carried out in accordance with events/time allocation. The impact of this alteration is more clearly seen when analyzing the performance of the Divisions. 2Q12 1Q12 % 2Q11 % 1S12 1S11 % R$ 000 General and Administrative Expenses (29,293) (24,155) 21.3 (26,961) 8.6 (53,448) (50,970) 4.9 % of Net Revenue 3.6% 3.3% - 3.6% - 3.5% 3.6% - EBITDA As a way of providing more transparency in the calculation of the make-up of this operational performance indicator, we provide a reconciliation table below, based on Operating Profit before Financial Results. In addition to Depreciation, Amortization and Depletion, the following other non-cash events are disregarded in the make-up of this indicator: variation in the fair value of biological assets and the depletion tranche of the biological assets, in addition to employee benefits. 2Q12 1Q12 % 2Q11 % 1S12 1S11 % EBITDA reconciliation (R$ 000) Operating profit before financial results 149, , , , , Depreciation, amortization and depletion 83,436 71, , , , Variation in fair value of biological assets (36,413) (32,923) 10.6 (27,693) 31.5 (69,336) (63,296) 9.5 Depletion tranche of biological assets 41,096 34, , ,681 69, Employee benefits (722) (257) (780) (7.4) (979) (3,078) (68.2) EBITDA 237, , , , , EBITDA margin 29.3% 28.3% % % 28.9% - Extraordinary Event (1) (14,068) - 0 (14,068) - Recurrent EBITDA 237, , , , , Recurrent EBITDA margin 29.3% 28.3% % % 28.0% - (1) Sale of fixed assets 6

7 As with Net Revenue, recurring EBITDA in the quarter and for the year-to-date, amounted to R$237.3 million and R$446.1 million, respectively, both figures setting a new record. EBITDA margin of 29.3% was the highest since the fourth quarter of 2010, when the figure was 30.4%. This significant improvement in operating results is linked to the gains in scale associated with the improvement in Unit Net Revenue, as well as cost management in the period. It should be pointed out that the operational performance achieved demonstrated that the Company managed to overcome the negative scenario of non-recurring cost pressure arising from the increased cost of labor, natural gas and resins - this last being a function of higher urea prices. Deca Division Wood Division Origin of EBITDA in 2Q12 NET EARNINGS Recurring Net Earnings amounted to R$184.6 million for the year-to-date, and R$98.4 million for the quarter, an improvement on the result for the same periods year earlier. This result emphasizes the operational improvements discussed earlier. 2Q12 1Q12 % 2Q11 % 1S12 1S11 % R$ 000 Net Earnings 98,401 86, ,383 (2.0) 184, , Extraordinary Event (1) 0 0-9, ,284 - Recurrent Net Earnings 98,401 86, , , , ROE 10.4% 9.3% % - 9.8% 9.6% - (1) Sale of fixed assets. DIVIDENDS/INTEREST-ON-EQUITY Shareholders have a statutory guarantee of a minimum dividend of 30% of adjusted net earnings. On June 29, 2012, a dividend provision was made of R$62,032,000, in the form of interest-on-equity, to be distributed to shareholders on August 15, The shares started to be negotiated exrights on July 27, VALUE ADDED Value Added in the semester totaled R$864.9 million, an increase of 16.0% compared to that in the previous year. Of this amount, R$303.2 million, equivalent to 15.2% of the revenues obtained, and 35.1% of the total value added, went to the federal, state and municipal governments in the form of taxes and contributions. Gross remuneration to shareholders will come to a total of R$ per share. Remuneration to Shareholders Remuneration for Labor Remuneration in Terms of Financing Remuneration to Government Distribution of Value Added in 1S12 (%) 7

8 INDEBTEDNESS Consolidated Gross Indebtedness at the end of 2012 totaled R$2,061.0 million, equivalent to Net Debt of R$1,253.0 million, an increase of 6.8% compared to the same period in This is basically due to the issue of debentures in the period, which will contribute to the implementation of the Company s investment plans. Net debt is equivalent to 1.4x EBITDA, over the last 12 months, and 32.8% of Shareholders Equity at the end of the period, which can be considered low. During the year, R$261.7 million was taken out in new loans, with R$203.2 million in loans paid back. The net financial result in the year amounted to (-) R$58.3 million, down 4.7% compared to the same period a year earlier. This improvement was due to the lower interest on loans in the period. 06/30/ /31/2012 Variation 06/30/2011 Variation R$ 000 Short-term debt 789, , , , ,526 Long-term debt 1,271,539 1,369,237 (97,698) 1,397,867 (126,328) Total indebtedness 2,061,034 1,962,706 98,328 1,929, ,198 Cash and equivalents 808, ,604 41, ,763 48,247 Net debt 1,253,024 1,196,102 56,922 1,170,073 82,951 Net debt/shareholders Equity (in %) 32.8% 31.6% % - 422, , , , ,878 Long Term 1, Short Term Gross Debt at the end of June 2012 (in R$ milhões) 2HY/ and afterwards Foreign Currency National Currency Debt amortization schedule (in R$ 000) Origin of debt (%) 8

9 FINANCIAL REVENUES AND EXPENSES 2Q12 1Q12 Var R$ 2Q11 Var R$ 1S12 1S11 Var R$ R$ 000 Financial Revenues 24,129 24, ,473 7,656 48,172 35,618 12,554 Financial Expenses (54,161) (52,323) (1,838) (48,597) (5,564) (106,484) (96,828) (9,656) Net Financial R esult (30,032) (28,280) (1,752) (32,124) 2,092 (58,312) (61,210) 2,898 OPERATIONS Deca Division 2Q12 1Q12 % 2Q11 % 1S12 1S11 % SHIPMENTS ( 000 pieces) BASICS 2,091 1, ,224 (6.0) 4,032 4,201 (4.0) FINISHING 4,134 4, , ,217 7, TOTAL 6,225 6, ,259 (0.5) 12,249 11, FINANCIAL HIGHLIGHTS (R$ 000) NET REVENUE 283, , , , , DOMESTIC MARKET 272, , , , , EXPORT MARKET 11,568 9, , ,853 17, Unit Net Revenue (in R$ per piece shipped) Cash unit cost (in R$ per piece shipped) (26.49) (24.84) 6.6 (24.90) 6.4 (25.68) (24.37) 5.4 Sales expenses (42,967) (37,329) 15.1 (38,925) 10.4 (80,296) (72,097) 11.4 General and administrative expenses (12,323) (10,561) 16.7 (9,364) 31.6 (22,884) (17,735) 29.0 Operating profit before financial results 48,326 57,107 (15.4) 53,057 (8.9) 105, ,065 (7.6) Depreciation and amortization 15,069 14, , ,920 25, Employee benefits (173) (108) 60.2 (233) (25.8) (281) (1,091) (74.2) EBITDA 63,222 71,850 (12.0) 66,040 (4.3) 135, ,311 (2.3) Recurring EBITDA margin 22.3% 26.6% % % 26.8% - A combination of Higher Volumes and Unit Net Revenue resulted in an increase of approximately 5% in Net Revenue compared to the immediately preceding quarter, and the same quarter in 2011, to R$283.6 million. For the year-todate, Net Revenue totaled R$553.7 million, up 7.2% compared to the Revenue reported in the same period in Over the preceding six months, this performance was better than the sector average, as measured by the indicator from ABRAMAT. During the period, this index showed an increase of 2.6%, which reflects the strength of the Deca brand and demonstrates the benefit of geographical diversification, begun in 2008, bringing the Company closer to its consumers. After having seen a strong increase in shipment volume between the years 2008 and 2011, at an annual average rate of 13.2%, Deca reported an increase of 2.1% in this semester, and an increase of 3.3% over the immediately preceding quarter, with the level of shipments being practically unchanged compared to the second quarter of 2011, the third best quarterly result in Deca s history. Cost pressure, principally associated with labor and natural gas during the second quarter of 2012, in addition to increased advertising and marketing expenses, in relation to the previous period, were the main reason for the retraction seen in EBITDA margin to 22.3%, with EBITDA reported of R$63.2 million for the quarter and R$135.1 million for the year. On an annual comparison, it should be pointed out that there was a comparative increase in General and Administrative expenses as a consequence of the altera- 9

10 tion in the apportionment criteria adopted until that time. Previously, apportionment was carried out as a proportion of Net Revenue, while from 2012, apportionment began to be applied by event/time allocation. For the year-to- date this category of expense came to a total of R$53.4 million at Duratex, equivalent to 3.5% of Net Revenue for the period. In 2011, expenses in this category came to a total of R$50.9 million in the first half, or 3.6% of Revenue, which clearly demonstrates the stability of the Company s G&A expenses. Of particular note in the period, was Deca s participation at Expo Revestir 2012, a benchmark in the international event calendar, recognized as one of the largest architecture and construction trade fairs. At the event, relationship initiatives were carried with the Company s public audiences (architects, building professionals, interior designers, and others), with the announcement of the 74 products launched in 2012, 31 from the vitreous chinaware segment and 43 from the metal bathroom fittings segment. The trade fair attracted approximately 43,000 visitors. Others Wholesalers Builders Retail Deca - Sales Breakdown 2Q12 (%) Wood Division 2Q12 1Q12 % 2Q11 % 1S12 1S11 % SHIPMENTS (in m 3 ) STANDARD 368, , , , , COATED 257, , , , , TOTAL 626, , , ,230,200 1,101, FINANCIAL HIGHLIGHTS (R$ 000) NET REVENUE 525, , , , , DOMESTIC MARKET 500, , , , , EXPORT MARKET 24,734 23, , ,541 44, Unit net revenue (in R$ per m 3 shipped) (0.6) Cash unit cost (in R$ per m 3 shipped) (459.40) (444.41) 3.4 (458.14) 0,3 (452.04) (464.51) (2.8) Sales expenses (51,745) (46,786) 10.6 (49,545) 4.4 (98,531) (93,531) 5.3 General and Administrative expenses (16,970) (13,594) 24.8 (17,597) (3.6) (30,564) (33,235) (8.0) Operating profit before financial results 101,560 78, , , , Variation in fair value of biological assets (36,413) (32,923) 10.6 (27,694) 31.5 (69,336) (63,296) 9.5 Depletion tranche of biological assets 41,096 34, , ,681 69, Depreciation, amortization and depletion 68,367 56, , , , Employee benefits (549) (149) (546) 0.5 (698) (1,987) (64.9) EBITDA 174, , , , , Extraordinary Event (¹) (14,068) - 0 (14,068) - Recurrent EBITDA 174, , , , , Recurrent EBITDA margin 33.1% 29.3% % % 28.6% - (1) Sale of fixed assets 10

11 The Wood Division s performance was the main aspect of note in the period. Both from the standpoint of shipment volumes and revenue, new records were set in 2012, both for the second quarter, as well as for the year-to-date , in São Paulo. They have the characteristics of innovation, high technology and design, in tune with international decoration trends. Others Shipments totaled 626,100 m 3 in the quarter, up 3.6% and 7.5% compared to the immediately preceding quarter and the same period in For the year-to-date, the increase amounted to 11.7%, to 1,230,200 m 3. By way of comparison, shipment performance for the industry, as measured by the indicator from ABIPA, over the six-month period, showed an increase of 11.6%, compared to that in Retail Construction Sector Furniture Industry The combination of gains in scale, as result of the increase in Unit Net Revenue and the management of the Cost of Goods Sold, resulted in a significant improvement in recurring EBITDA, of 27.1% compared to the immediately preceding quarter and 19.3% compared to the same period in 2011, to R$174.1 million. EBITDA margin showed a strong improvement, coming to 33.1% in the period. For the year-to-date, EBITDA was up 21.5%, to R$311.0 million. Contributing to this performance was the year-on-year reduction in General and Administrative Expenses, related to the alteration to recognition criteria, as mentioned earlier. This event, however, should not be allowed to overshadow the highly positive performance seen due to the recovery in the furniture industry, with the introduction in 2012, in the retail furniture segment, of more manageable financing terms, as well as tax incentives, bringing competitive conditions of the furniture segment into line with those for white goods consumer durables. As a way of strengthening competitive advantages based on the variety of products offered to the market, and aligning patterns with international trends, 18 new panel finishes were developed during the quarter, which will be presented at Formóbile, a major trade fair which brings together companies in Brazil and abroad, representing the various supply sectors in the furniture industry. These new patterns will be launched at the event, which is held during the period July Wood - Sales Breakdown 2Q12 (%) CAPITAL MARKETS In June 2012, 260 debentures were converted into 2,600 new ordinary shares, thus increasing the quantity of outstanding shares to 550, Thus, at the end of June 2012, Duratex had a Market Capitalization of R$5,826.8 million, taking the share price quote at the end of the month of R$ For the year-to-date period, the share price showed an appreciation of 19.2%, while the Bovespa Index depreciated by 4.2%. On the BM&FBovespa spot market, 510,900 trades have been recorded in the shares of Duratex for the year-to-date, with million shares changing hands, representing a total trading volume of R$2,073.2 million, or average daily volume of R$16.6 million. This level of liquidity has ensured the presence of the shares in the Ibovespa, an index which is composed of approximately 60 shares, the main inclusion criteria for which are aspects related to share liquidity. Another important index in which the Company s shares are included is the ISE the Corporate Sustainability Index. This index consists of 51 companies that are outstanding in the application of the international sustainability Triple Bottom Line concept, that evaluates social, environmental and economic-financial aspects in an integrated manner, incorporating practices re- 11

12 lated to corporate governance, characteristics of the business, nature of the product and climate change. The shares of Duratex are listed on the BM&FBovespa Novo Mercado, a differentiated segment of the market for companies that, on a spontaneous basis, are outstanding for the adoption of the highest standards of corporate governance. In this section of the market, the Company commits itself to arbitration through the BM&FBovespa Novo Mercado Arbitration Chamber for the resolving of any and every dispute or controversy arising among the Company, shareholders and managers. In addition to the pre-requisites of the Novo Mercado, the Company has a differentiated dividend distribution policy, equivalent to 30% of adjusted net earnings, while 1/3 of its Board of Directors consists of independent members, with the Company also adhering to the Abrasca code for selfregulation and good practices. In April, the Company published its sustainability report, in digital format alone, in accordance with Global Reporting Initiative (GRI) standard level A+. This means that the entire report was verified by an external party, in this case PwC, thus ensuring greater transparency in the information provided. The report can be accessed on the Company s internet page, on the following website address Foreign Investors Others 26.2 Pension Funds 12.6 Treasury Ligna and Family Shareholding structure as at June 2012 (%) Itaúsa and Families SOCIAL AND ENVIRONMENTAL RESPONSIBILITY At the end of the period, the Company had 10,615 employees, to whom a total remuneration of R$84.2 million was allocated in the quarter, totaling R$163.6 in the year. 2Q12 1Q12 % 2Q11 % 1S12 1S11 % Values (in R$ 000) EMPLOYEES (quantity) 10,615 10,624 (0.1) 10, ,615 10, Remuneration 84,217 79, , , , Obligatory legal charges 48,698 41, , ,322 88, Differentiated benefits 16,471 17, , ,527 28, The Company implemented a series of environmental initiatives during 2012, spending a total of R$13.0 million in this area, of particular note being the treatment of effluents, the collection of residues, and the maintenance of its forestry areas. This amount was 13.0% higher than investment of this nature carried out in In addition, during 2012, a series of projects is planned with a socio-environmental focus, including incentives for culture and sport. The following projects are ongoing: (i) the Community Library project, which involves the installation of three libraries in municipal schools in Botucatu - SP, Uberaba - MG and Cabo de Santo Agostinho - PE, as well as the revitalization of two libraries already in existence in the municipalities of Taquari - RS and Estrela do Sul - MG; (ii) the Annual Activity Plan of the São Paulo Modern Art Museum MAM project; (iii) the Swimming, Athletics and Weightlifting Championships project, which intends to provide the best training conditions for disabled athletes to participate in the 2016 Paralympics; 12

13 (iv) One step forward for education, which will benefit needy children and adolescents in the community of Paraisópolis through the practice of football and supporting activities, and integration with the community and society; (v) Judo of the Future, which teaches the practice of Judo to needy children and adolescents based on a work methodology which stimulates cognitive and intellectual development, tolerance, living together and concentration; (vi) Cinema Cine Moviola and Casinha de Filmes (little house of films), through which there will be the donation, to schools in the public network, of complete structures for the showing of digital films and training of professional staff to use them. In the second quarter of 2012, additional funds were provided to ongoing projects, while cultural and sports projects were supported, to be implemented this year and in 2013 with investments in the period of approximately R$2,184,000. Here are the highlights: (i) 1º Bienal Iberoamericana de Design (first bi-annual Ibero-American design show), which will be held at the Museu da Casa Brasileira (Brazilian House Museum), which will host one of the most important meetings for the promotion of contemporary design; (ii) Exposição Fronteiras (frontier exhibition), at which pieces of Brazilian art and a collection of objects developed by designer Marcelo Rosenbaum with the community of Chapada do Araripe, in the state of Piauí were put on show at Palazzo Giureconsulti/Affari, in Milan, in Italy, during Design Week ; (iii) Ação Educativa - Fundação Bienal de São Paulo (São Paulo bi-annual foundation education initiative) which will promote meetings between teachers and culture professionals, with the object of expanding the role of the educator and relating art to every educational situation. The initiatives of the project will also be developed during the 30ª Bienal de Arte de São Paulo (São Paulo 30th bi-annual art show); (iv) Música e Cidadania (music and citizenship), which involves the Repertory Chamber Orchestra, a combination of popular music and children s music, with the aim of stimulating the study of music and working on technical questions, style, repertoire, cooperation, commitment, leadership and improvisation; (v) Girassóis,(sunflowers) which involves a contemporary dance show inspired by the works of Van Gogh and arteducation workshops, with practical teaching proposals to be used in the classroom, integrating dance, music, theatre, art and the circus; (vi) Gols - Artilheiros do Futuro (goals centerforwards of the future), which will provide theoretical and practical lessons on football and complementary activities, with particular emphasis on strengthening schooling, foreign languages, information technology, general knowledge, psychological support, dental and medical monitoring, seminars and guidance sessions; (vii) Rugby Cidadão (citizen s rugby), in partnership with the Municipal Secretary for Education of São Paulo, which will provide children and youngsters with access to the practice of rugby at the Unified Educational Centers CEU, with complementary activities focused on the teaching of values and behavior to students; (viii) Center for Olympic Cycling Training - BMX, which will implement a center for sports training in Olympic and Paralympic cycling, with the object of providing those benefited with the techniques and basic elements of this sport, as well as perfecting and improving the practice of sport, in addition to providing the opportunity to participate in official events (national and international). In addition, worthy of note is the carrying out and completion of the Greenhouse Gas Emission Inventory for the period 2011, which for the first time was audited by an independent company. With this information, Duratex responded voluntarily to the Carbon Disclosure Project (CDP), an European initiative in the financial sector which encourages companies to publicize their commitments and policies that serve to mitigate the effects of climate change. Another event of note was the launching of the Duratex Supplier Management program. This program is a structured process, defined by socio-environmental, economic, quality and service-level criteria, which have become aspects for consideration in supplier relationships. In the first stage, an assessment of information will be carried out with respect to suppliers labor policies, socio-environmental practices and stance, in addition to the carrying out of scheduled visits and document control. The process also envisages the development of a program to monitor and improve these practices. 13

14 OMBUDSMAN SERVICE In the area of improving processes and procedures related to good corporate governance practices, Duratex s Ombudsman Service was launched in May, with the objective of establishing a dialogue channel between the Company and its public audiences, to ensure the fulfillment of the Company s Code of Ethics and Values. In addition to this, the channel also permits the identification of opportunities for improving processes, policies and behavior, based on analysis of the complaints received. ACKNOWLEDGMENTS We are deeply grateful for all the support received from our shareholders, the dedication and commitment of our employees, the partnerships we have with our suppliers and the confidence placed in us by our clients and consumers. The Management 14

15 ANNEX consolidated financial statements (conform to International Financial Reporting Standards (IFRS), in compliance with CVM Instructions 457/07 and 485/10) ASSETS (in R$ 000) 06/30/2012 AV% 03/31/2012 AV% 06/31/2011 AV% IFRS ASSETS CURRENT 2,089, % 1,996, % 1,924, % Cash and equivalents 808, % 766, % 759, % Client accounts receivable 731, % 685, % 629, % Stock 411, % 410, % 392, % Amounts receivable 31, % 29, % 22, % Recoverable taxes and contributions 88, % 89, % 101, % Other assets 18, % 16, % 18, % NON-CURRENT 5,074, % 4,923, % 4,721, % Linked deposits 21, % 20, % 12, % Amounts receivable 62, % 67, % 52, % Pension plan credits 79, % 78, % 69, % Recoverable taxes and contributions 40, % 33, % 30, % Deferred income tax and social contribution 85, % 66, % 92, % Other investments % % % Fixed assets 3,108, % 2,973, % 2,820, % Biological assets 1,108, % 1,107, % 1,044, % Intangible assets 567, % 575, % 598, % TOTAL ASSETS 7,164, % 6,920, % 6,646, % 15

16 LIABILITIES AND SHAREHOLDERS EQUITY (in R$ 000) 06/30/2012 AV% 03/31/2012 AV% 06/30/2011 AV% IFRS LIABILITIES CURRENT 1,295, % 1,009, % 945, % Loans and financing 786, % 592, % 531, % Charge of debentures 2, % 1, % - 0.0% Suppliers 180, % 161, % 121, % Staff obligations 114, % 92, % 97, % Accounts payable 79, % 92, % 49, % Taxes and contributions 68, % 68, % 77, % Dividends and equity-on-interest payable 62, % % 66, % NON-CURRENT 2,052, % 2,128, % 2,138, % Loans and financing 1,171, % 1,270, % 1,397, % Debentures 100,094 99, % - Contingency provisions 141, % 139, % 138, % Deferred income tax and social contribution 502, % 502, % 485, % Other accounts payable 136, % 118, % 117, % SHAREHOLDERS' EQUITY 3,816, % 3,781, % 3,562, % Capital social 1,550, % 1,550, % 1,550, % Cost of share issue (7,823) -0.1% (7,823) -0.1% (7,823) -0.1% Capital reserves 311, % 309, % 304, % Re-valuation reserves 86, % 87, % 101, % Profit reserves 1,480, % 1,442, % 1,214, % Adjustments in equity valuation 415, % 418, % 411, % Shares held in treasury (23,032) -0.3% (23,032) -0.3% (16,369) -0.2% Participation of non-controlling shareholders 3, % 3, % 3, % TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 7,164, % 6,920, % 6,646, % 16

17 PROFIT AND LOSS STATEMENT (in R$ 000) 2Q12 06/30/12 1Q12 03/31/12 Var. % 2º tri. 06/30/11 Var. % 1S S 2011 Var. % Net sales revenue 809, , % 751, % 1,546,839 1,411, % Domestic market 772, , % 718, % 1,477,445 1,349, % Export market 36,302 33, % 33, % 69,394 61, % Variation in fair value of biological assets 36,413 32, % 27, % 69,336 63, % Cost of goods sold (COGS) (452,534) (418,113) 8.2% (422,538) 7.1% (870,647) (803,986) 8.3% Depreciation/Amortisation/Depletion (75,255) (63,416) 18.7% (66,482) 13.2% (138,671) (122,209) 13.5% Exhaustion of biological assets (41,096) (34,585) 18.8% (35,998) 14.2% (75,681) (69,273) 9.3% Gross profit 276, , % 253, % 531, , % Sales expenses (94,712) (84,115) 12.6% (88,470) 7.1% (178,827) (165,628) 8.0% General and administrative expenses (29,293) (24,155) 21.3% (26,961) 8.6% (53,448) (50,970) 4.9% Management fees (3,210) (3,108) 3.3% (3,453) -7.0% (6,318) (7,407) -14.7% Other operating results, net 519 (7,402) % 8, % (6,883) 11, % Operating profit before financial results 149, , % 143, % 285, , % Financial revenues 24,129 24, % 16, % 48,172 35, % Financial expenses (54,161) (52,323) 3.5% (48,597) 11.4% (106,484) (96,828) 10.0% Profit before income tax and social contribution 119, , % 111, % 227, , % Income tax and social contribution - current (39,899) (24,522) 62.7% (42,808) -6.8% (64,421) (53,446) 20.5% Income tax and social contribution - deferred 18,446 3, % 31, % 21,681 25, % Net earnings for the period 98,401 86, % 100, % 184, , % Company Shareholders 98,250 86, % 100, % 184, , % Participation of non-controlling shareholders % % % 17

18 CASH FLOW STATEMENT (in R$ 000) CASH FLOW 2Q12 1Q11 Var 2Q11 Var Var R$ Operational Activities Net earnings for the period (1.982) Items with no cash effect: Depreciation, amortisation and depletion Variation in fair value of biological assets (36.413) (32.923) (3.490) (27.693) (8.720) (69.336) (63.296) (6.040) Interest, exchange rate and monetary variations, net Provisions, asset write-offs (5.883) (11.359) (8.262) (407) (17.230) Investments in working capital (18.902) (26.170) (43.735) (11.634) (81.521) (Increase) reduction in assets Client accounts receivable (46.553) (29.288) (17.265) (60.246) (75.841) (66.868) (8.973) Stock (489) (8.540) (32.596) Other assets (9.141) (15.568) (21.906) (2.714) (17.715) Increase (reduction) in liabilities Suppliers (2.242) (3.301) Staff obligations (12.279) (1.217) (5.878) Accounts payable (37.379) (7.569) (289) Taxes and contributions (321) (409) (28.464) (730) (18.943) Other liabilities (6.511) (3.118) (3.393) (11.980) (9.629) (15.126) Cash generated from operational activities (7.806) Investment activities Investments in fixed and intangible assets ( ) ( ) ( ) ( ) (93.413) ( ) ( ) Cash used in investment activities ( ) ( ) ( ) ( ) (93.413) ( ) ( ) Financing activities Tickets funding ( ) ( ) Tickets debentures (129) Amortisation of financing ( ) ( ) (100) ( ) ( ) ( ) Dividends and interest-on-equity (347) (68.241) (111) (236) (68.588) ( ) Shares held in treasury and others (1.073) - (4.572) Cash generated (used) in financing activities (60.019) ( ) (10.036) ( ) Exchange rate variation on cash and equivalents Increase (reduction) in cash in the period 994 (185) (404) (381) ( ) (61.363) Initial Balance Closing Balance